Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “British Airways owner IAG flew past expectations, with operating profits coming in three per cent ahead of market forecasts in the final quarter.
“The group’s market-leading networks, strong brands, and fierce operational focus continue to drive performance skyward.
“Passenger revenue growth was broadly in line with the group’s increased capacity, while ticket prices held firm.
“On the cost side, fuel represents the largest single expense for an airline and easing fuel prices have provided a strong tailwind for the bottom line, with fuel costs falling nearly seven per cent.
“Looking ahead, capital expenditure is set to ramp up over the coming years as IAG looks to expand its fleet and upgrade its digital infrastructure.
“That should see capacity grow between two-to-four per cent annually over the next few years.
“There’s plenty of free cash flow pumping through the business to fund these investments, with some left over, allowing management to boost shareholder returns with dividend payment up 8.9 per cent alongside a new €1.5billion share buyback programme.
“IAG remains a cut above most of the competition operationally.
“Despite the run-up in share price over the last year or so, the valuation still looks attractive thanks to its impressive profit growth.
“With a strong balance sheet, market position and generous shareholder returns, there still looks to be some upside on offer, so the gates haven’t closed yet for investors looking to get on board.”
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